Can realtor’s credibility fall to less than zero?

After years of manipulation of buyers and a callous disregard for the truth, the National Association of realtors and many agents have no credibility.

When a realtor talks, do you hear “blah, blah, blah”? Why is that? At some level you know that most of what they say is bullshit, statements made without regard to the truth, usually to manipulate behavior for self-serving reasons. realtors want only one thing: to generate the largest commission possible with the least amount of time and effort. Bullshit helps reach their goal because bullshit smooths over all objections by telling people what they want to hear.

The Credibility Continuum

The credibility of anyone’s opinions relies on the history of factual and truthful statements made by the individual. I’ve been writing about real estate issues daily for over seven years, so I have some credibility on the subject due to the large number of statements and predictions that proved to be accurate and prescient. Nobody is infallible, so achieving 100% credibility is impossible, but with skill and integrity, anyone can gain a great deal of credibility to comment on a subject.

The easiest way to visualize how credibility works is to see it as a continuum as described below. Infallibility (100% credibility) is on the right, and always wrong (-100% credibility) is on the left, and zero credibility is in the middle. Notice that always being wrong is not 0% credibility because if someone were always wrong, anyone could know what the right answer is by believing the opposite. Further, it takes a great deal of skill to be either right or wrong all the time because it would require the person to know the difference.

Zero credibility comes from random guessing; sometimes the person is right and sometimes the person is wrong. This can happen because the person has no skills or knowledge in a subject matter, or as in the case of realtors, the person may simply be making up opinions and guessing what someone wants to hear — bullshitting.

realtors score less than zero on the credibility continuum. Many have minimal skills, but those that do are trained to offer self-serving bullshit answers to any question. Many realtors bullshit out of ignorance which puts them closer to zero, but still in the negative; however, many realtors are smart, and they knowingly lie and manipulate people making their credibility score even more negative.

realtors are not alone on the negative side of zero. Politicians also consistently score less than zero, and since politicians are generally smart people, they generally score even more negative because they know exactly what they’re doing when they offer casual lies to manipulate public opinion.

Am I being unfair? Is my characterizations of realtor training wrong? They value the truth, don’t they?

Facts about fancy features and a touch of drama make a listing stand out; some ‘puffing’ is good, but don’t go overboard

By Sanette Tanaka, April 10, 2014 6:56 p.m. ET

It’s not what real-estate agents say, it’s the way they say it.

Yep. The truth doesn’t matter as long as bullshit is delivered with style.

Home listings that tout property characteristics, like granite countertops and wood-burning fireplaces, in the description sell for a premium, says Bennie Waller, professor of finance and real estate at Longwood University in Farmville, Va., who studied the makeup of listings.

“The more verifiable information, the better,” he says. Each property characteristic mentioned in a listing increases the sale price by just under 1% and its probability of selling by 9.2%, on average. That means a listing with 15 additional property characteristics sells for roughly a 13.5% price premium. Prof. Waller excluded standard features, such as bedrooms, from the analysis.

This study is crazy. Did the properties sell for more because they had more features or because the realtor said the property had features? I rather doubt it was the realtor description that made buyers pay more.

The study also found that each additional positive opinion word—like “beautiful” or “fabulous”—boosted the sale price by 0.9%. That means 10 positive words translate to a 9% bump in the sale price, on average.

Don’t forget “gorgeous!!!” A search of the SoCal MLS including active and closed properties from the last two years turns up 21,200 descriptions with the word “gorgeous.” Perhaps the listings without the word gorgeous didn’t sell? Everyone wants a gorgeous property, don’t they?

But the sky isn’t the limit when it comes to the number of words included or listing length. “You have one or two seconds to capture the buyer or buyer’s agent’s attention, and you need to sell [your home] as effectively and efficiently as possible. You need to carefully choose your vernacular, but at the same time, not become verbose,” Prof. Waller says. “There can be some puffing, but too much of it will encourage the buyer to look elsewhere.”

What is puffing? Isn’t that the politically correct word for bullshitting?

For instance, a small increase in private agent-to-agent comments increases a sale price by 3%, but too many words compared with the average leads to a 6% drop in the price. These comments, which can only be seen by agents, could be as mundane as explaining where the key is hidden or whether there are animals on site, but could also include warning information like no negotiations are accepted or the showing window is limited, says Prof. Waller. “It might deter people from looking at a property, for instance, if you have only 24 hours to show a property,” he says.

“Less is more. If you give them everything, they have nothing to call you about,” says Mara Flash Blum, associate broker with Sotheby’s International Realty in New York City. “You want to tease them to the point where they’ll call.”

Tease them so they’ll call? I guess it depends on what you’re selling…

Eric Tan, real-estate broker and attorney with Redfin in Pasadena, Calif., believes shorter is better and tries to keep his descriptions well under his local MLS’s character limit. “All those words can be very daunting,” he says, adding that he focuses on upgrades in the property and special features, like a bonus room or outstanding view.

Prof. Waller and co-authors Kimberly Goodwin of the University of Southern Mississippi and H. Shelton Weeks of Florida Gulf Coast University examined 16,383 transactions between March 2000 and February 2009 in a south-central Virginia multiple-listing service. The researchers looked at listing descriptions and their effect on sale price and probability of sale. The study, “The Impact of Broker Vernacular in Residential Real Estate,” has been accepted by the Journal of Housing Research.

Talking Points: Be Sure to Mention the Wainscoting

Word choice in listings affects sale prices, according to a new study; two current examples of listings in New York with high-value sentences in their descriptions.

48 responses to “Can realtor’s credibility fall to less than zero?”

I mean, Realtors are salespeople, pure and simple. I thought everyone knew that. When you go out to purchase a property or a product, you should know that the salesperson represents the seller unless you have made a contract naming her as your buyer’s broker. It’s the listing agent’s job to get the best price possible for her seller, and you should know that the seller is who she’s representing. I don’t blame salespeople for being salespeople and for trying to make a living. As long as the salesperson does not lie to me and attempt to defraud me, I’m not going to blame him for featuring his shoddy goods in the best light possible and for trying to persuade me that this has never been a better time to buy and that I’m getting a peach of a deal.

I figure it is my responsibility as an adult to cut through the BS, gather as much information as possible, and otherwise protect myself.

We’ve become a population of passive sheep who expect someone else to take responsibility for our errors and ignorance. Time to grow up and take responsibility for our decisions.

Agree with everything you say, but I think there is an important corollary. Although it is the listing agent’s job to get the best price for the seller and it is the buyer’s agent’s job to get the best price for the buyer, in reality the opposite is true. Since the listing agent only communicates with their seller and has no contact with the buyer, the listing agent has absolutely no influence with the buyer or the buyer’s offer. Since the listing agent does have contact with the seller and only makes money if the deal closes, the listing agent in reality will try and get the seller to lower their price. There is nothing dishonest or coercive about the process. It is just reality, and very few buyers and sellers understand the reality.

Closing the deal is primary; getting a good price for the client is secondary.

I just sold a property in Boulder City, Nevada. The agent for the buyer made the transaction very easy by manipulating the buyers to agree to all our terms. I wouldn’t have sold the property for any less, so perhaps this agent did the right thing for those buyers, but it certainly felt like she was on my side rather than theirs.

Every word out of a realtors mouth is designed to do something: either, (1) elicit information (to limit the scope of the house hunt to houses that you will make offers on, or build a dossier of personal information to later use to exert pressure during the negotiation period); (2) build rapport (to use to gain influence during the negotiation period), (3) establish realtor’s superior market knowledge and valuation skills (so that realtor can control buyer during negotiation process); or (4) gloss over problems with the property and exaggerate the value of worthless items like granite counters and fireplaces.

Once buyers start to listen defensively and speak offensively this becomes even more clear. When a realtor says something, always respond with the opposite and raise your voice slightly. For instance, let’s say the realtor says that this house has been recently renovated with new cabinets and countertops – you reply: “That’s NOT the color I would have chosen.” Always make it about opinion since they can’t argue with what you like without offending you. If you make it about facts, they will cite the most BS study that probably doesn’t even exist.

You can even take it up a notch and say something like: “My religion doesn’t believe in such ostentation.” But you better pre-coordinate this your spouse or he/she might give it away by laughing at the wrong time. And be ready for a follow-up question about what religion you belong to. Pick something obscure, or even make it up. The whole point is to soften the realtor up so that when you are making offers they are your puppet, and not the other way round.

“the listing agent has absolutely no influence with the buyer or the buyer’s offer.”

Wrong-O.

FYI, in a strong housing market, the buyer’s agent (if they want their offer to be considered) is typically in communication with the listing agent prior to the offer being submitted. Many times, a deal is struck before the offer is even written.

In a strong market, the listing agent is King, and dictates the price. Most smart listing agents are looking for ways to represent both sides of the transaction.

“So, is deflation a threat to the economic health of the United States? Not to leave you in suspense, I believe that the chance of significant deflation in the United States in the foreseeable future is extremely small” ~ Ben Bernanke, Speech Before the National Economists Club, Washington, D.C, November 21, 2002

The European central bank has been buying worthless debt from Greece and other countries running Ponzi schemes for years. Deflation is bound to become a problem when those countries inevitably default. They will need to print a lot of Euros to paper over the debt destruction coming their way.

If you want to know what someone’s views of society are, ask what they believe is the best long-term investment.

I am fascinated each year when Gallup Poll asks Americans to choose the best option among real estate, stocks and mutual funds, gold, savings accounts and CDs, or bonds. The results are a pop psychologist’s dream of cognitive issues, belief systems and ideologies.

Now, before we get into the details, some caveats: First, people often don’t really know what they want or think. Instead, when questioning people about their hopes and desires, we end up with a distorted mass-media version of a bad Robin Leach television series. Sad but true, often we don’t know what we want out of life.

Second, survey responses are not all they appear to be. There is value in the collective data, but we need to dive into the details to tease out some fascinating cultural differences.

Note what happens when we divide the survey responses along income lines. We discover some very telling things about the American psyche.

Consider the differences between what the wealthy and poor believe is the best long-term investment:

Upper-income Americans are much more likely to say real estate and stocks are the best investment, possibly because of their experience with these types of investments. Upper-income Americans are most likely to say they own their home, at 87%, followed by middle (66%) and lower-income Americans (36%). Gallup found that homeowners (33%) are slightly more likely than renters (24%) to say real estate is the best choice for long-term investments.

Now compare that with this:

Lower-income Americans, those living in households with less than $30,000 in annual income, are the most likely of all income groups to say gold is the best long-term investment choice, at 31%. Upper-income Americans are the least likely to name gold, at 18%.

This is the silliest post from Ritz yet. 1) Commenting on a poll. 2)Poll compares an apple to orange. Must be running out of material to write about 😉

An investment = something that generates an income stream (apple). Gold does not generate an income stream (orange), so naturally, the wealthy prefer equities/RE as investment.

However, poll the wealthy on whether they prefer to hold cash over the long term, vs gold, and see what they say. Oh.. and don’t forget to ask if they have any bull’n or coins tucked away away in all of their floor safes.

A poll like this only confirms that the gold has lost it’s luster. The euphoric bubble mentality is over and only those lacking in financial intelligence believe it’s a worthwhile “store of value”, much like lottery tickets.

The poor may prefer gold but they don’t have the capital to prop up gold prices. If the rich have abandoned gold as an asset class, it’s fate is sealed.

Count me as one of “those lacking in financial intelligence.” I would much rather make money.

“The poor may prefer gold but they don’t have the capital to prop up gold prices.”

Exactly! The poor do not have the capital to influence gold at all; ever! Although Barry’s poll said that the poor think that gold is the best investment, it does not say what the poor buy as an investment or don’t buy as an investment. The truth is that although gold is a terrible investment, the poor do not buy gold or any other investment. The poor do not have the discretionary income to buy gold or any other investment. His poll shows only one thing, that the poor have very poor investment education, but it says absolutely nothing about who is buying and selling gold and what the resultant price may be.

” If the rich have abandoned gold as an asset class, it’s fate is sealed.”

Displaying your ignorance once again. Generally speaking, rich Americans started abandoning gold as an asset class in 1933 and have been further ignoring it ever since. And yet, the price has gone from $20.67 per ounce in 1933 to about $1300 today. Only the truly ignorant and intentionally blind think that rich Americans are the only rich people and the only people who have enough of an interest in gold to influence the price. Why do you insist on spewing nonsense regarding subjects of which you know little to nothing?

Generally speaking, traders and speculators do not buy gold. They buy gold futures or options on a gold ETF, or even shares of a gold ETF itself, none of which are gold. Savers in Asia are buying gold. The Chinese and Russian cental banks are buying gold.

Ritholz created a ridiculous poll which is not proof of, nor evidence of anything that is currently affecting the pog. He made a prediction awhile back and is now trying to make up data to fit his prediction. His logic is beyond flawed and is just plain stupid. (IR, I said his logic was stupid, not the person, Barry Ritholz.)

By the way, I would definitely describe you, MR, as one having financial intelligence. You just don’t have the sense to know when you don’t know anything.

But we never escaped the bubble mentality for all assets. We never allowed true price discovery in housing. It’s vastly overpriced now. So when you talk about gold being a bubble (it is), you must include everything else … housing, equities, food, energy, education, art, wine, etc, etc, etc …

The figures are out and it looks like the United States exported a record amount of gold to Hong Kong in January. Not only was this a one month record… it was a WHOPPER indeed.

According to the data just released by the USGS, the United States exported a stunning 57 mt of gold bullion to Hong Kong in January. Not only is this 3 times more gold exported than January 2013 (17 mt), it was 84% more gold than the record month set in August (31 mt).

As we can see, gold bullion is fleeing the U.S. and heading to the East. Again.. that 57 mt figure is just gold bullion.

Not bad, and fairly close, but 1 metric ton is equal to about 32,150 TROY ounces which are the ounces used when pricing gold. EX. Spot bid price on kitco right now is $1300.80 per TROY ounce. There are 14.683333_ troy ounces per pound.

57 tonnes is about 1,832,592.5562 ounces, and the ounces are understood as troy ounces whenever refering to precious metals.

Most financial analysts have an optimism bias that colors their judgment. It’s the main reason the herd is generally overly bullish. This year was notable because the herd was bullish based on faith rather than a careful examination of housing market conditions. Reality lowered the credibility of all these analysts, at least for anyone who remembers their incorrect call.

Market analysts are dialing back on their expectations for the housing sector this year following reports of continued sluggishness in what should have been the start of a busier season.

In a report issued earlier this week, Fitch Ratings announced it is tapering its forecast for 2014 in acknowledgement of what has so far been a “subpar spring selling season.”

Sales of both new and existing homes in March fell short of expectations, dashing optimistic projections of a rebound following the end of an unusually harsh winter. Housing starts also disappointed as homebuilders remain concerned about the shape of the market.

Looking past spring, Fitch’s report focuses on expected growth throughout the rest of the year, with housing starts and new home sales forecast to see percentage gains in the mid-teens. Average median new home prices, meanwhile, are expected to rise about 3.5 percent, a substantial moderation from growth over the past two years, which was largely seen as unsustainable.

However, even with early numbers coming up short, with two months left in the season, some commentators are saying it’s too early to write off spring as a disappointment just yet—including Bob Curran and Robert Rulla, directors and homebuilding analysts at Fitch.

“The biggest message that we put out was that we do see so far … that [spring data] is disappointing relative to expectations,” Curran said. “[I]t was a very good spring last year, so the comparisons are kind of tough.”

Over the coming months, Curran says he expects to see more favorable year-over-year comparisons.

Furthermore, while data released so far might not be stacking up well against forecasts, Rulla sees little reason to be skeptical about summer projections: “There’s a little bit more caution given what transpired the first three months of the year, but we think that there’s still going to be growth in the overall housing market in 2014.”

As far as March’s low sales numbers are concerned, one thing to keep in mind is that inventory remains limited across the country and is especially weak in certain areas.

“Interpreting low sales volume in March as bearish—we think that’s misguided,” said Mike Simonsen, co-founder and CEO of real estate data firm Altos Research. “It doesn’t tell you anything about the actual demand for those homes. You can’t tell how many people want to buy homes by how many are sold.”

[The above is perhaps one of the most embarrassing and ignorant statements I’ve read from a prominent researcher. He is clearly trying to back-peddle from previous statements, but it merely shines an even brighter light on his mistake.]

By Altos’ measure, the housing cycle is set to peak at the end of June before falling off into the fall and winter, as it does every year. Using that “map,” Simonsen says the company has good visibility on what the year as a whole should look like and predicts a 10 percent increase—an optimistic outlook compared to most others.

Meanwhile, at Clear Capital, the company is terming the latest slowdown in price changes “the new normal.”

“Even though we’ll see improved housing metrics across the board this summer, it won’t be the banner year that 2013 was,” said Dr. Alex Villacorta, VP of research and analytics for the company’s Data Division. “I think it’ll be more measured, [and] I think it’ll be more localized … it may not show up in the national housing metrics numbers, but it certainly will be in certain markets.”

For the near future, Villacorta says the numbers to watch will be those in the mid-tier housing segment, where the most housing activity traditionally takes place. That happens to be a particularly weak area, though he believes even a small boost in the next month or two will help put the market back on more stable footing compared to the year’s early months.

“I think just seeing the signs of activity may turn the tides of confidence in consumers,” he said. “Probably in about 45 days, we’ll know what’s happening in spring fully.”

According to a report released this week by LendingTree, down payment percentages for 30-year fixed-rate purchase loans fell in the first quarter to an average of 15.78 percent, down from just higher than 16 percent in the last quarter of 2013.

At the same time, the company found average credit scores for borrowers matched with lenders on its own network have dropped 6 percent year-over-year, opening up the credit pool a little more.

“As the housing market improves and refinance activity declines, lenders are adapting their guidelines to improve credit accessibility for borrowers,” said LendingTree founder and CEO Doug Lebda. “Relaxed lending guidelines translates to a larger pool of qualified homebuyers that could boost the housing recovery.”

Investment banker and outspoken housing analyst Christopher Whalen, predicts that by this time next year, 40% of mortgage originations will be done by nonbanks.

“When you hear Ginnie Mae CEO Ted Tozer speaking at public events, he says more and more he’s seeing nonbank counterparties for FHA,” Whalen said, speaking at the SourceMedia Mortgage Servicing conference in Dallas. “I hope that nonbanks will step up to the plate and take over originations. Commercial banks no longer want anything to do with closing that note.”

Whalen is giving his first public appearance as Head of Research for Kroll Bond Ratings Agency; news exclusive to HousingWire. In an aside, he told HousingWire that Kroll will be paying close attention to nonbanks in the future.

Whalen estimates around $250 billion in unpaid principal balance on mortgages at the big banks remains distressed or is going to need future resolution.

“Timelines for resolving defaulted loans extend as long as three years in Northeastern states and Florida,” he said, adding that he would prefer investing in NPLs over REO-to-rental, where the margins remain compressed.

Indeed, as his slide show presentation showed, more than 6% of FDIC-insured mortgages remain distressed and will require resolution. “All those people need phone calls,” he told the gathered group of mortgage servicers.

Whalen warns about the “dumb money” flooding into the NPL and REO-to-rent market. Dumb money, Whalen explained, is unsophisticated investment capital that distorts prices in the market place. Mortgage Servicing Rights are now trading at six times the annual cashflow, whereas Whalen believes it should be closer to two or three at fair market value.

The Securities and Exchange Commission has filed fraud charges against Robert Vitale, who allegedly defrauded investors in a Florida real estate venture.

The SEC’s complaint alleges that Vitale and his firm Realty Acquisitions and Trust, Inc. raised at least $8.7 million from investors, many of whom were senior citizens. Vitale is also accused of selling unregistered securities and acting as an unregistered broker-dealer.

Vitale allegedly told his investors that their funds were “100% protected” when they were not, and he claimed to be a financial expert with a business degree from Notre Dame. In fact, he never attended college after graduating from Notre Dame High School in West Haven, Conn.

The SEC alleges that although Vitale told investors his success rested on his “great honesty and integrity,” he neglected to mention that he was charged by the SEC in 2004 for participating in a pump-and-dump market manipulation scheme or that he later settled the charges and was barred from the brokerage industry as part of the settlement.

It’s amusing when you see someone (who has absolutely NO CLUE about what I buy/sell/hold/hedge at any given point in time, or what I missed or didn’t miss) questions anothers credibility, yet presents themselves as if they had any credibility of their own to challenge anothers. Sad really.

Although, he does post as mellow ruse, so at least a disclaimer precedes every one of his posts 😉

Are we regular guys supposed to be able to time long term investments to a one year time frame? I thought only insiders could do that. If you have a crystal ball could I get some end of year stocks/gold/home prices please

The US exported 80 tonnes of gold in January. At $1300 per ounce, that comes to about $3.35 billion. No wonder America is the greatest country in the world. We got rid of all that barbarous relic and got back electronic 1’s and 0’s. Darn, we are smart.

The US mines about 20 tonnes per month. I wonder where the other 60 tonnes in January came from?

And another silly question. If the US, (“if” because maybe the info is incorrect), exported 80 tonnes, why did not the Federal Reserve return more of Germany’s requested gold. Germany is only asking for 300 tonnes of their gold and the Fed saw fit to return 5 tonnes. Why not more? What possible reason could the Fed have for not returning more of Germany’s gold? It is a serious question. Especially to those who repeatedly and wrongly predict that the pog will decline to $500.

If gold is so worthless, barbaric, poor wealth preservation asset, a bubble asset, or any of the repeatedly stupid assignations, what possible reason could the Fed have for not returning more of Germany’s gold?

Shouldn’t the Fed be jumping at the chance to get rid of the worthless bubble asset? Shouldn’t the Fed be jumping at the chance to get rid of the liability and storage costs?

Please, enlighten those of us lacking in financial intelligence with your wisdom.

Did you predict the decline from $1,900 to $1,200? I think we both know the answer to that is “no”. Then how can you categorically say that $500 is impossible?

It took 19 years for the 70’s/80’s gold bubble to unwind, and we are less than three years into the current bear market. If you didn’t see the price decline from $1,900 to today coming, how can I take anything you write seriously?

The Fed saw fit not to cough up 300 tonnes of Germany’s gold, even though it is owned by Germany. 300 tonnes, at $1300 per ounce, is about $12.5 billion, and the Fed will create $55 billion in 1’s and 0’s in April.

If gold is so worthless, barbaric, poor wealth preservation asset, a bubble asset, or any of the other repeatedly stupid assignations, why doesn’t the Fed just use some of that $55 billion to buy the gold and then hand it to Germany.

Or, if gold is so worthless, barbaric, poor wealth preservation asset, a bubble asset, or any of the other repeatedly stupid assignations, why doesn’t the Fed just create $12.5 billiion more of those 1’s and 0’s and buy the gold and return it to Germany?

The Fed is so smart that it can stimulate a $17 trillion economy, but it can not return $12.5 billion of gold? It can create $4 trillion in new currency in the last few years, but it can not return $12.5 billion of gold?

Please, enlighten those of us lacking in financial intelligence with your wisdom.

[…] than they work, partly because buyers are still weary after the recent bust, and partly because realtors have no credibility. Potential homebuyers react today with fear and trepidation when prices rise for no reason, as they […]

[…] isn’t a “must” like it was 30 years ago, so Millennials don’t feel much urgency. Also, with realtor credibility at less than zero, Millennials aren’t as easily duped by fantasies of boundless appreciation as previous […]